Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

Evaluating Risk is a Key Difference Between Successful and Unsuccessful Traders

by February 25, 2024
February 25, 2024
Evaluating Risk is a Key Difference Between Successful and Unsuccessful Traders

This secular bull market advance is running over everyone attempting to get in its way. It’s why I always say never to bet against one. Trying to short this type of bull market is the equivalent of financial suicide. I usually have music playing in the background while I’m working and, on Friday, as the stock market closed, Elton John’s “I’m Still Standing” started playing. I thought, “WOW, this is timely!” EVERYTHING has been thrown at this secular bull market and it’s still standing, “better than it ever did.”

Resiliency is a key element of bull market moves and we’ve certainly witnessed that. But, bull market or not, we absolutely should lower our bar of expectations right now. I would definitely remain fully invested, but just try not to grow too bearish when we inevitably enter a period of consolidation or (gasp!) selling. The first half of calendar quarters 1-3 is historically MUCH more bullish than the second half of calendar quarters 1-3. During the current secular bull market that began in 2013, here’s the S&P 500 breakdown by annualized returns by calendar quarters 1-3:

1st half of calendar quarters 1-3: +18.14%2nd half of calendar quarters 1-3: -3.37%

That’s a very large discrepancy in performance and it’s calculated over 11+ years of data. We know what’s been driving our major indices higher. It’s been the Magnificent 7 and friends. In a 70-page Seasonality PDF that I’ve offered to everyone on 16 of the largest market cap companies, a TON of seasonal information was shared on each. Following the theme of 1st half vs. 2nd half of calendar quarters, let me share with you the annualized returns for both halves for each of these 16 companies:

1st Half of Calendar Quarters 1-3:

AAPL: +50.54%MSFT: +37.67%GOOGL: +50.42%AMZN: +51.51%NVDA: +75.63%META: +56.44%TSLA: +62.69%AVGO: +18.26%COST: +25.50%ADBE: +33.82%CSCO: +18.85%AMD: +72.48%NFLX: +47.21%INTC: -1.11%AMGN: +21.81%SBUX: +17.13%

2nd Half of Calendar Quarters 1-3:

AAPL: +9.52%MSFT: +12.35%GOOGL: -8.70%AMZN: +13.29%NVDA: +47.80%META: +8.93%TSLA: +40.41%AVGO: +40.21%COST: +9.64%ADBE: +20.37%CSCO: +2.69%AMD: +26.77%NFLX: +19.45%INTC: +13.98%AMGN: +2.52%SBUX: -4.05%

Of these 16 stocks, only AVGO and INTC perform better during the 2nd halves of quarters.

I deliberately ignored Q4, because this quarter has a long history of seeing considerable strength during both halves. But in quarters 1-3, we should simply recognize the historical patterns and be sure to lower our expectations, especially after such a significant rally since late-October 2023.

We’re still seeing a “risk on” market environment, which favors the bulls. If we begin to see relative strength in more defensive sectors, that could be the signal to perhaps take on less risk. Using StockCharts.com’s seasonality tool, we can compare defensive utilities (XLU) vs. ultra-aggressive technology (XLK) since 2013:

Utilities don’t outperform technology very often, but it seems to happen somewhat frequently in the 3rd months of calendar quarters. Check out March, June, September, and December above. March is the best calendar month for XLU outperformance vs. the XLK. But the second months, February, May, August, and November, favor technology in a HUGE way!

Now let’s look at consumer staples (XLP, defensive) vs. consumer discretionary (XLY, aggressive), using the same seasonality chart since 2013:

Again, it’s the third months of calendar quarters where defensive areas show some relative strength and the second months where we’ve seen MASSIVE relative weakness. We need to recognize these seasonal patterns to become better traders, knowing when it’s appropriate to take on more risk…..and when it’s not.

Based on all of this, it seems rather prudent to me to be a bit more cautious now. I’m not at all saying that our major indices are primed for a big fall. Instead, I’m simply pointing out that we’re in a time of the year when risk does escalate. It’s up to each individual as to what that might mean in your own trading and/or investing.

By the way, I am still offering the “Bowley Trend”, our seasonal PDF, for FREE. CLICK HERE and claim your copy!

Happy trading!

Tom

0
FacebookTwitterGoogle +Pinterest
previous post
Nikki Haley bets it all on Super Tuesday after dismal primary night down south
next post
Biden’s vision for a Palestinian state doomed, experts say: ‘An explicit recognition of Hamas’

You may also like

Coppock Curve Still Working On a Major Bottom...

October 20, 2022

Hindenburg Omen: The Truth, Effects, and Duration

July 19, 2024

The SCTR Report: Workday Rises on Strong Earnings...

August 23, 2024

Mish’s Daily: What is the Impact of the...

September 21, 2022

2023 Outlook

January 5, 2023

DP Trading Room: Technology On Its Way Down?

July 10, 2023

S&P 7000 By End of 2024?

March 27, 2024

The Ord Oracle November 28, 2023

November 29, 2023

Silver Cross Index Tops Beneath Signal Line on...

March 29, 2025

The Market is Moving Higher, BUT Avoid Real...

January 31, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • TSA tells Americans their Costco cards won’t fly at airport security despite love for hot dogs

      June 7, 2025
    • Trump announces China will restart rare earth mineral shipments to US after productive call

      June 7, 2025
    • Musk feud presents ‘unprecedented’ dynamic compared to past Trump disputes: expert

      June 7, 2025
    • Snub of Musk’s NASA nominee ally preceded sudden ‘big, beautiful bill’ criticism, Trump feud

      June 6, 2025
    • Supreme Court rules DOGE can access Social Security information

      June 6, 2025
    • US sanctions money laundering network aiding Iran as regime faces nuclear reprimand at IAEA

      June 6, 2025

    Categories

    • Business (8,149)
    • Investing (2,019)
    • Politics (15,558)
    • Stocks (3,134)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved